Last month’s news that Elysian Brewing in Seattle was selling out to Anheuser-Busch InBev sent ripples through American craft brewing like no other acquisition before it.

Here was a brewery that stands as a bedrock of the movement, whose guiding light on the brewing side literally wrote the book on how to start an independent craft brewery, that had just released a collaboration beer with an indie rock label with the tag line “corporate beer still sucks,” giving in to the supposed forces of darkness.

“I would say it was quite a surprise from a brewery that has been in business the past two decades,” said Wallace, CEO of Left Hand Brewing in Longmont. “We look at them as contemporaries. I am shocked (AB) was able to get somebody like that.”

But the outcome was the same. Coming off a year that saw the world’s biggest brewing company and private equity buy into independent craft beer, rumors of more mergers and acquisitions are swirling, leading to the inevitable question: Who’s next?

There’s a Colorado-sized hole on the growing map of U.S. craft breweries now in the hands of corporate owners. Few states have the street cred Colorado can claim, either, with well over 225 craft breweries open and scores more in planning. Sooner or later, will we see a Colorado independent brewery snatched up by one of the big boys?

New Belgium has expanded to include an East Coast brewery in North Carolina (Kyle Wagner, The Denver Post) .

“I think it’s likely that we will,” Kim Jordan, president and CEO of New Belgium Brewing in Fort Collins, told First Drafts. “My sense is, with AB anyway, they are probably looking at a regional strategy. They have a brewery here (in Fort Collins), they have a distributorship here. It makes sense to me we would see an announcement about a craft brewery as well.”

To get this out of the way quickly: It is all but certain New Belgium will not be changing hands. The state’s largest craft brewery by a large margin — and the third largest in the country behind Boston Beer Co. and Sierra Nevada — made a pair of business moves a couple of years ago that greatly increase the odds it will remain independent.

In 2013, New Belgium announced Jordan and her family had sold their controlling stake to the company’s employee stock ownership program, making the brewery 100 percent employee-owned. New Belgium also became a certified B Corporation, or benefit corporation, which means its board can make decisions based on many factors and not just the bottom line.

Before the employee stock ownership plan, New Belgium was a closely held privately owned company, with Jordan owning the majority of voting shares and also the largest block of single ownership shares. That made a hostile takeover from within — with founding shareholders pitted against each other — an unrealistic scenario, Jordan noted.

Jordan said New Belgium has not been approached to sell.

“I think for the most part, people feel like we have a plan, and we are pretty committed to that plan and we are not a likely candidate,” Jordan said.

Jordan had a front-row seat for the Elysian drama. She and Cantwell have been dating for years, and the ties that bind New Belgium and Elsyian are tight. In fact, when that notorious Budweiser Super Bowl commercial aired ridiculing the manhood of craft beer lovers, Jordan was sitting in the living room of the brewer responsible for Elysian’s pecan peach pumpkin amber.

While Jordan said she is not happy about the pending Elysian sale, she is also stunned by the viciousness of the reaction. Selling out is seen as the end goal for most start-up industries — consider high tech — but not so in craft beer.

“I find myself wanting to remind people this is beer,” Jordan said. “We are not solving big world problems.”

“Sure, on the one hand, I am proud of beer drinkers and brewers for caring so much,” she said. “But there is a line somewhere between the kind of incredible devotion people feel for this movement, and when it kind of flips over to scary.”

As Jordan and others have noted, the Anheuser-Busch shopping spree appears to be regionally strategic and targeting breweries with brewpubs, which can be more immediately profitable and serve as valuable brewing testing grounds.

Jordan said the purchases also seem motivated by a desire to stake a claim to the entire three-tier alcohol distribution system in place since after Prohibition – production, distribution and retail.

“Really, the goal of the three-tiered system was primarily to make space between brewers in the case of beer and drinkers in the case of retail,” she said. “Those lines are really blurred now.”

Of the three recent A-B acquisitions, Blue Point Brewing in New York state and Elysian are about the same size, producing around 50,000 barrels a year, followed by Bend, Oregon’s 10 Barrel Brewing, at about 40,000 barrels. An A-B spokesman declined to comment on future potential mergers and acquisitions.

Let’s take a look at the largest craft breweries in Colorado. The list below from the Boulder-based Brewers Association covers 2013 production — 2014 figures are not out yet, although some breweries have made them public — and does not include breweries who choose not to publish their production figures, if any were to qualify for this list:

Given the recent AB purchases, breweries north of 40,000 barrels are the most likely candidates to receive an overture from big beer. That would put six or seven Colorado breweries in play.

Oskar Blues sounds like a buyer (provided by OB).

Oskar Blues’ size, reputation, name recognition and restaurants surely make it an attractive target. But the craft can pioneers threw the rumor mill a curve last week when a brewery representative said the brewery is more likely a buyer than a seller.

Spokesman Chad Melis said the Longmont-based company, which opened a second production brewery in North Carolina in 2013, is investigating buying smaller breweries experiencing growing pains.

Our post mentioned a couple of Colorado examples of craft beer mergers and partnerships. There is a more recent precedent: In November, San Diego’s Green Flash Brewing announced the acquisition of its 3,000 barrel-a-year neighbor, Alpine Beer Company.

Jennifer Litz-Kirk, senior editor of the industry publications Beer Business Daily and Craft Business Daily, said in an interview such mergers provide a “halo effect” for the bigger brewery and money and support for the smaller one.

“It’s another way for the bigger craft brewers to stay more relevant,” Litz-Kirk said. “Everything is local — uber-local. With 4,000 breweries now, how local is local? A square block?”

It’s unclear how craft beer drinkers would respond to a proliferation of similar deals — supportive or at least accepting, or cynically viewing the larger craft breweries as behaving like big corporate beer raiders.

In an e-mail response to questions, Wynne Odell was emphatic about the fate of the 107-employee company, which shipped 99,517 barrels to 11 states in 2014: “Odell is NOT on the market and has no intentions of selling to big beer.”

She said Odell does not have a transition plan but is actively discussing one. Odell shareholders have committed to three primary requirements: “It must retain our cultural legacy, maintain our financial stability and ensure internal control.”

As another member of Top 50 list, Left Hand Brewing has been approached frequently by private equity investors and multinationals including Anheuser-Busch and MillerCoors about selling out, Wallace said.

Wallace said 100-employee Left Hand is already half employee-owned and will be “making announcements later this year” about steps that would strengthen its position as an independent craft brewery.

Eric Wallace of Left Hand: fiercely independent (photo provided by Left Hand).

“We have every intention of staying fiercely independent,” he said. “Is there a succession plan in place? Absolutely. We want to either grow or attract talent necessary to keep this thing moving forward and doing what we do.”

Wallace is not surprised by corporate beer’s thirst for craft breweries, given the segment’s tremendous growth. To him, the bigger question is why would independent breweries want to sell. He mentioned a few economic reasons — breweries that find themselves upside down, having grown too quickly or weighed down by a heavy debt load.

“We like doing what we’re doing,” Wallace said. “Being in the beer business is really fun. It’s always a challenge and never boring, and we’re working with great people. Why get out of that? What we do is awesome and the impact we have on our communities is huge. We value that quite dearly. There is value beyond dollars, what we do.”

Todd Usry, the brewmaster and general manager of Denver-based Breckenridge Brewery, which fits the production volume and brewpub profile for acquisition, said the company has not been approached to sell out and has no intentions to do so.

“The big thing to me is, the craft beer industry was built on individuals and their stories,” Usry said.

Todd Usry of Breckenridge (RJ Sangosti, The Denver Post).

When craft breweries sell out, “I think there is some serious authenticity that is lost, and that the brand loses,” he said. “We’re not corporate. We are entrepreneurial and individual.”

Usry, like others, is concerned about the business ramifications of big-beer buyouts. “It’s going to be harder and harder to get our voices heard at the wholesale level,” he said. “It’s hard enough for craft beer in general to get meetings with big chain buyers. Now, AB can go in and pitch Elysian.”

Adam Avery, owner of the Boulder brewery that bears his last name, declined to comment through a spokeswoman, citing a busy schedule. This week, Avery opens the doors on a long-awaited $27 million new location in Boulder with 30 beers on tap and a restaurant with a full dining menu.

Outside of that 2013 top 10 list, Dry Dock Brewing in Aurora is growing fast, last week announcing it had attained “regional brewer” status by hitting 15,000 barrels in 2014.

Much of the attention has focused on Anheuser-Busch’s designs, but how about MillerCoors? The company has not been as aggressive as its larger rival on the acquisition front, instead investing more resources into its own Blue Moon brand.

The Chicago-based company purchased a stake of Terrapin Beer Co. in Athens, Ga., in 2009 and brought Minneapolis-based Crispin Cider Company in 2012. Last spring, speaking to The Denver Post editorial board, Pete Coors mentioned the possibility of more acquisitions. Company officials reiterated that in an earnings call last week.

Jonathan Stern, a spokesman for MillerCoors, said in an e-mail the company will look at additional merger and acquisition opportunities if they are priced right and “provide entry into a new style or geography where we feel underdeveloped.”

For craft breweries, selling to big beer provides access to lucrative distribution networks. But the megabreweries have found acquisition can also muddy the distribution waters, said Litz-Kirk, of Craft Business Daily.

When MillerCoors bought Crispin, it acquired a patchwork of differently aligned distributors — some carrying mostly MillerCoors, some carrying mostly AB, some independent, she said. The process of aligning that network with those carrying mostly MillerCoors can prove costly and difficult, and the products might miss some time in the market, she said.

As more deals involving craft breweries go through, it legitimizes the practice and makes others more likely, Litz-Kirk said.

“When that kind of money is out there and the quote, cool kids have already done it, why not?” she said. “”What is a little bit of backlash compared to 70 million dollars?”

So there you have it — a lay of the land and statements from Colorado’s big five craft breweries expressing a desire to remain independent.

Does that mean the state will not factor in the next big beer or private equity acquisition announcement? Of course not.

Beer cooler is already tricky as there are many craft brew imposters taking up shelf space.
Esurance, Odwalla, and others have sold out.Of course, the value and quality have been dumbed down back to mega corp standards.

Steven B

Long live New Belgium and their craft beers. There was celebration when Fat Tire was finally available in MI. What a pain it was to travel out of state to acquire this nectar of the gods!

Chris Jamison

“What we do is awesome and the impact we have on our communities is huge.” – Eric Wallace of Left Hand Brewery

“The big thing to me is, the craft beer industry was built on individuals and their stories,” – Todd Usry of Breckenridge Brewery.

I would give anything if these creeps who think they are saving the world by tossing handfuls of coriander and lemon zest in to a vat would just finally get over themselves. I mean really. When did people in Colorado stop liking things because they liked them and instead start buying into this whole cult-ish “lifestyle” creepiness? It’s creepy.

John01235

No, what’s creepy is when good craft brewers sell out to the biggies that make products having all the taste of dishwater.

You need to get over yourself.

Chris Jamison

If these dudes really were proud of their products you’d think they would want the more people to have access to them. I suspect they are too much in love with themselves and their concept of their little exclusive little “community”. FYI…..it’s not hard to be a “craft brewer”….all you do is home brew for 2-3 years while going to CSU, then get a mommy daddy loan for a million bucks, add some peppery citrus notes and TADA!!!!

denverdrew

I like how you totally ignore the one quote that agrees with your viewpoint from the blog: “I find myself wanting to remind people this is beer,” Jordan said. “We are not solving big world problems.”

Guest

I read that part carefully…..her statement mirrors mine

denverdrew

Gotcha. Thanks for clarifying. I figured it did, which is why I thought it strange you didn’t include it as a counter.

Alan

New Belgium should sell, Kim Jordan has made that brewery decline since having an affair and buying out her husband.

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In Colorado, our pint glasses overflow with excellent beer. New breweries, new batches, festivals every other week. How lucky are we? First Drafts is The Denver Post's beer blog aimed at helping you keep tabs on the state's ever-expanding craft beer culture. We offer a mash of news, event coverage, homegrown stories, tasting notes and tips to help you imbibe. Expert drinker or homebrewer? Let us know what you're loving about Colorado's beer scene. Not sure exactly what a firkin is? No worries, let us be your guide. Go ahead. Belly up and drink it in!